The Bank of Canada’s decision to hold its policy rate at 2.25 percent through the first four months of 2026 reflects a base-case outlook of modest 1.2 percent GDP growth and inflation returning to the 2 percent target by early 2027, even after the March CPI spike to 2.4 percent driven by elevated energy prices from Middle East tensions. Market-implied odds of 55.5 percent for at least one hike this year stem from money-market pricing of roughly two 25-basis-point increases in the second half, fueled by uncertainty over whether the energy-driven inflation surge proves transitory or feeds into broader price pressures. Traders are watching the June 10 rate decision and July Monetary Policy Report for signals on whether the central bank will shift from its current stance of looking through the oil shock.